Correlation Between IShares Core and NBI Unconstrained

Can any of the company-specific risk be diversified away by investing in both IShares Core and NBI Unconstrained at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining IShares Core and NBI Unconstrained into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Core SPTSX and NBI Unconstrained Fixed, you can compare the effects of market volatilities on IShares Core and NBI Unconstrained and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in IShares Core with a short position of NBI Unconstrained. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and NBI Unconstrained.

Diversification Opportunities for IShares Core and NBI Unconstrained

0.86

Correlation Coefficient

IShares Core  NBI Unconstrained

Very poor diversification

The 3 months correlation between IShares and NBI is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SPTSX and NBI Unconstrained Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBI Unconstrained Fixed and IShares Core is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on iShares Core SPTSX are associated (or correlated) with NBI Unconstrained. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBI Unconstrained Fixed has no effect on the direction of IShares Core i.e., IShares Core and NBI Unconstrained go up and down completely randomly.

Pair Corralation between IShares Core and NBI Unconstrained

Assuming the 90 days trading horizon iShares Core SPTSX is expected to generate 1.28 times more return on investment than NBI Unconstrained. However, IShares Core is 1.28 times more volatile than NBI Unconstrained Fixed. It trades about 0.33 of its potential returns per unit of risk. NBI Unconstrained Fixed is currently generating about 0.11 per unit of risk. If you would invest  3,963  in iShares Core SPTSX on May 6, 2025 and sell it today you would earn a total of  353.00  from holding iShares Core SPTSX or generate 8.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

iShares Core SPTSX  vs.  NBI Unconstrained Fixed

iShares Core SPTSX

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SPTSX are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, IShares Core may actually be approaching a critical reversion point that can send shares even higher in September 2025.

NBI Unconstrained Fixed

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NBI Unconstrained Fixed are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, NBI Unconstrained is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares Core and NBI Unconstrained

The main advantage of trading using opposite IShares Core and NBI Unconstrained positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, NBI Unconstrained can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in NBI Unconstrained will offset losses from the drop in NBI Unconstrained's long position.

The idea behind iShares Core SPTSX and NBI Unconstrained Fixed pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.